Prospects for a swift end to the Iran war were dented this week as divisions within the Iranian regime hinder Tehran’s efforts to put forward a coherent, unified position in negotiations. And as a result, the Gulf states remain unable to export energy via the Strait of Hormuz. Detailed trade figures from China, for March, provided early signs that domestic demand in the Gulf collapsed last month - something likely to be confirmed by the Saudi Q1 GDP figures due next week. And the Q2 data are likely to be a lot worse. Finally, requests by the Gulf countries for US currency swap lines appear aimed at meeting dollar demand without drawing down FX assets and are not a signal that dollar pegs are under threat.
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